Monday, July 27, 2015

The Los Angeles
Department of Water and Power (DWP) has done little to change practices at two
utility nonprofits accused by auditors of “cavalier” spending after receiving
more than $40 million in ratepayer money, even though they promised reforms
months ago, reports theLATimes.

One administrator charged
more than $30,000 in gas and carwashes on his nonprofit-issued credit card
between 2010 and 2014, auditors found.

Another charged more than $660,000 for
things such as steak dinners and trips to Las Vegas, Hawaii and New Orleans,
recommended much stricter travel policies and controls on credit card spending.

City leaders had almost no idea what had been done with the $40 million.

Tuesday, July 21, 2015

On
the heels of a report to Sen. Charles Grassley about how the American Red Cross
spent it money as a result of the Haiti Earthquake in 2010, internal documents newly obtained by ProPublica
and NPR call into question whether the Red Cross itself has an accurate
accounting of how money was spent.

The report concluded that the Red Cross’ figures on the
number of people helped in a hygiene promotion project were“fairly
meaningless.”

The reports,
assessments from 2012 of some of the group’s health and water projects,
conclude that the charity failed to properly track its own spending, oversee
projects, or even know whether or not they were successful.

As ProPublica detailed in an
earlierstory, the Red Cross took much of the nearly $500
million donated for Haiti and passed it on to other aid groups, keeping a
portion to cover its overhead.

The Red Cross’ oversight of some of those grants – $10
million for cholera projects – was so poor that “at least one partner
mismanaged their funds unbeknownst to ARC,” one report says, using the acronym
for the American Red Cross. The Red Cross also did not assess whether the
cholera projects were effective. “None of the cholera program partner’s work
has been evaluated by ARC andARC doesn’t know for sure if the objectives were achieved.”

The
internal assessments lay much of the blame on American Red Cross headquarters
in Washington. (ProPublica )

Donors gave $9.7
million to the National Children’s Leukemia Foundation over a 4 year period. It paid out only
$57,451 in “direct cash assistance to leukemia patients” in that time.

The New York State
attorney general’s office said in a petition that it seeks to shut down the
Brooklyn-based foundation and recover money that the attorney general’s office
said had been raised fraudulently.

The foundation’s
Make a Dream Come True program for children with cancer was mostly a mirage since the
foundation had spent nothing on the program since March 2009.

Investigators
said the foundation amounted to a one-man operation doing business from the
basement of a home in the Bergen Beach section of Brooklyn. That one man, the
petition said, was Zvi Shor, who started the foundation in 1991 after losing a
son to leukemia. The court papers said Mr. Shor, who ran a construction and
plumbing business, had paid himself $595,000 in salary and $600,000 in deferred
compensation from 2009 to 2013, along with the promise of a lifetime pension of
more than $100,000 a year.

He had been
convicted of bank fraud in 1999.

In 2012, Mr. Shor transferred $655,000 to an
Israeli organization that Mr. Shor set up, supposedly for research.

The AG’s petition also said the foundation had paid for more than $30,000 in
personal expenses for Mr. Shor, including $16,615 for gasoline and tolls and
$9,000 for supplies used to renovate his house.

The foundation’s
accountant and its president did not know who the foundation’s directors were. [The New York Times]

Friday, July 17, 2015

exposing the crisis in nonprofit
fraud leadership…a crisis of pervasive and monumental waste, fraud, abuse,
mismanagement, and malfeasance throughout the charitable sector which
costs taxpayers and contributors tens of billions of dollars annually;
and,

seeking reforms that will restore
the public’s lost confidence in the sector.

With fraud rife in
conflict and disaster zones, aid charities are under pressure to be open about
corruption but one third of the world's 25 biggest aid charities declined to
make their fraud data public in a Thomson Reuters Foundation investigation…Five of the biggest NGOs said they had not experienced any
diversions of funds during this period…Mercy Corps said it had been
defrauded in its Afghanistan program in 2011, when a staff member absconded
with funds worth $257,670…World Vision International, the largest humanitarian
NGO in the world in expenditure terms, said $1 million of its resources went
missing between 2009 and 2013…Care International, Oxfam GB, Plan International,
Norwegian Refugee Council, ActionAid, Handicap International, Concern
Worldwide, Médecins sans Frontières (MSF), the American Jewish Joint
Distribution Committee and the Danish Refugee Council all reported
losses…International Rescue Committee, Christian Aid and International Medical
Corps said they do not share fraud data publicly…Action Against Hunger (ACF)
International, Catholic Relief Services, Feed The Children, Samaritan's Purse,
and Global Communities failed to respond to the question on fraud (source)

... “lax oversight is out of step with the times and is
an invitation to corruption...this
secrecy can’t go on, and it won’t. There has been a push in recent years to
hold nearly every sector of American life to tougher standards of
accountability…reforms
will make much difference without strong watchdogs to oversee philanthropy and
nonprofits. It’s time to create a new federal bureau to police this sector,
much as Britain has a national Charity Commission. State law enforcement
officials must also do a better job of enforcing state-level laws…All the powerful institutions in
American life need vigilant oversight, and philanthropy is no exception.” (NY Times)

“As presidential
candidates find new ways to exploit secret donations from tax-exempt groups,
hobbled regulators at the Internal Revenue Service appear certain to delay trying
to curb widespread abuses at nonprofits until after the 2016 election." New York Times

“Less than 20 percent
of organizations victimized by fraud last year recovered all the money lost.” (source)

…nonprofits face a
critical need to address fraud from the top (source)

Almost 200,000 Charities In CA Are Threatened

The California
Attorney General wants to propose regulations with teeth that forces the tens
of thousands of noncompliant charities operating in California to comply with
registration requirements.

The California Department of Justice estimates that there are 52,000
charities within California that have not complied with proposed regulations.
Moreover, it is estimated that there are at least 130,000 additional
non-California charities operating in the State that have not complied.

The hammer may be coming.

The proposed regulations, if adopted, will mean such charities will
need to suspend activities and fundraising if they are delinquent in their
registration, and if suspended or revoked, their board members will be subject
to personal liability and their assets subject to forced divestiture. (source)

Skunk of the Month…

Skunk of the Month is the twice-monthly designation
made by Nonprofit Imperative, the
organization dedicated to eliminating waste, fraud, abuse and mismanagement in
nonprofits and government. The Skunk of the Month award is given to
charities and government officials who show blatant disregard for the interests
and trust of contributors and taxpayers. This month’s example is:

“They came
to do good and they did very well indeed (for themselves).”

IRS Failed Attempts For Charity Oversight

Even
though… ‘much of the oversight responsibility for charities
rests with the I.R.S., which awards tax exemptions to charities and monitors
them for compliance. Few come under close scrutiny, however….the tax agency’s oversight of
charities was dropping…Sham
[charities continue to be used’ to fleece well-meaning donors. But over the
last decade, efforts to tighten the way charities are regulated or coordinate
action between the Internal Revenue Service and state officials have largely failed either
because of regulatory indifference, political lobbying or lack of political
will (NYT) The Nonprofit
sector leadership doesn’t care either.

Schools Fail Outside Scrutiny

Walton
Family Foundation’s billion-dollar effort to find a way to innovate and improve
public schools was hijacked leaving a trail of profiteering and financial
crimes, political corruption, lawsuits blocking audits. A study shows stunning lack of transparency and
accountability, according to a new report,Cashing in on Kids.

·In New York, a Walton grantee that
has received $3.6 million has been lobbying state legislators for seven years
to block audits of charter schools

·In California, having received more than $31
million since 2004, successfully lobbied that state’s Legislature in 2011 to
defeat a proposal that would have required the schools to the same public
safety standards as public schools.

·The record of financial fraud and undue enrichment
stretches from coast to coast. The chief financial officer of The Brighter
Choice Foundation, a Albany, New York, charter group that received more than
$9.4 million, was arrested and charged with embezzling more than $200,000. In
Washington, D.C., a city official on a board charged with financial oversight
of charters, was arrested and charged with taking $150,000 from the trustees of
one school under its jurisdiction. In the Miami, Florida, region, Academia
Corp., a chain that runs more than 60 schools and received more than $1.1
million in grants, was exposed by The
Miami Herald for “millions of dollars of profiteering” in transactions
tied to buying and leasing school buildings.

The Tennessee secretary of state’s office is investigating
a cancer nonprofit with family ties to four other charities that weresued in May by the federal governmenton allegations they bilked donors of $187 million,
according to a person familiar with the matter.

The group being investigated is the American Association
for Cancer Support Inc., of Knoxville. Two of the four
charities mentioned in the suit—one of the largest-ever involving a
charity—have agreed to shut down. The American Association for Cancer Support
wasn’t named in the suit and continues to operate. (WSJ)

This is but another of many “cancers” on the charitable sector. Others
were.

Charity Check Up:

Smithsonian Continues To Be Less Than
Transparent.

With a checkered past(here,here,here, here, here, here here, here, here ), the Smithsonian gets caught again.Dr. Willie Soon of
the Harvard-Smithsonian Center for Astrophysics failed to disclose the source
of his support. A climate-change skeptic, Dr. Soon may have been compromised by
his funding sources. According to the Guardian, Soon has received
more than $1.2 million from ExxonMobil, the American Petroleum Institute, the
Southern Company, and the Koch family. He not only received the funding, but
delivered research papers to a variety of professional or academic journals
without disclosing his energy industry financial support. Additional funding
came from anonymous donors, including contributions from the Donors Trust, which, too, has been strongly associated with the
Koch brothers.

Update:
TheSmithsonian
Institutionsaid it would adopt
tighter procedures to govern conflicts of interest involving its researchers,
the latest development in a widening national discussion of scientific
integrity. Details are still being worked out, but the Smithsonian said the new
guidelines would seek to prevent outside funders, such as corporations, from
exercising undue influence over the findings of its studies. The guidelines are
also likely to require strict disclosure of funding sources, going beyond the
requirements of most other academic institutions and scientific journals, the
Smithsonian said.

There's no simple answer. And there is no
one-stop shop that can answer those questions. But if you're willing to put in
a bit of time, you can be a more informed donor and increase the chances that
your money will reach those in need.

Here are a few tips, based on conversations with
experts and reporting in Haiti:

·Research before you give.

·Take the time to read up
on your group — this can be as simple as a few Google searches and checking out
informationcompiled byvariouscharitywatchdogs. Have there been any issues with management? Has the group
performed well in the past? Has it had problems? The answers to these questions
can inform your choices.

·If you do give, you can demand meaningful transparency.

·Nonprofit organizations
are generally required to make only broad disclosures about their finances.
(The American Red Cross' annualtax return, for example, doesn't
reveal anything at all about its Haiti program.)

·But as a donor, you can
ask the organization you're giving to make public, detailed disclosures about
their spending.

As Haiti aid expert Jake Johnstonpointed out, you can also ask elected officials to exercise
their own oversight of charities that raise money after disasters.

Local
groups or those that have deep local ties can be the best option

One issue that came up again and again in our
Haiti reporting is that the American Red Cross did not have significant
experience working in Haiti, hindering its efforts to operate in the country.
We also heard about groups — some large, some small — that had been in the
country for decades and employed Haitians in top positions. They tended to be
more successful.

As Francois Pierre-Louis, a
political science professor and former community organizer in Haitiaddedon Reddit, donors can
"work with local organizations that are connected with the population. Too
often these groups are not even recognized."

So if you're considering giving to a group, it's
worth doing a bit of research to see what kind of experience it has in the
country in question.

Jonathan Katz, a reporter who wrotethe bookon the troubled
post-earthquake relief efforts in Haiti, argues that it's the time between
disasters when the most important work has to be done. From his book:

"Poverty and a lack of local institutions
create the shoddy conditions that make disasters deadlier than they have to
be...Supporting efforts to give aid directly to local governments, and the goal
of building local institutions that operate independently of foreign control,
will go exponentially further than cargo planes of tarps and bottled water.
It's true that we don't always know what locals will do with that assistance,
but that's the point. It's up to them."

1.Charitable giving rose
for the fifth year in a row in 2014, rebounding past a prerecession peak to an
estimated $358 billion, according to an annual report from the Giving USA
Foundation. The report, “Giving USA 2015: The Annual Report on Philanthropy for
the Year 2014,” shows that contributions rose in all categories — individuals,
corporations, foundations and bequests — making up for ground lost during the
economic downturn. After reaching $355 billion in 2007, giving dropped 15
percent to $303 billion in 2009, according to the Giving USA data, which is
figured in inflation-adjusted dollars. The
increase in individual giving, at $258.5 billion, accounted for 54 percent of
the growth, up from $249 billion in 2013. Donations included several large
gifts from the high-tech world, such as a $1.9 billion contribution from Bill
and Melinda Gates to their foundation. Younger entrepreneurs also gave big.
Sean Parker donated $550 million to his foundation and his donor-advised fund
at Fidelity, and Jill and Nicholas Woodman gave $500 million and Jan Koum gave
$556 million to the Silicon Valley Community Foundation.

2.Sen. Charles Grassley is demanding the
American Red Cross explain how it spent nearly half a billion dollars raised
after the 2010 Haiti earthquake. In a letter to Red Cross CEO Gail McGovern, the Iowa Republican gave the
venerated charity until July 22 to answer 17 detailed questions, many of which it has never addressed
publicly. (ProPublica)

3.Update: Weeks after The Postexposed a nonprofit for hiring Police
Commissioner Bill Bratton’s longtime cronies, he is now facing a second inquiry
into the charity. The NYPD’s inspector general is conducting a “preliminary
review” focused on financial disclosures made by the New York City Police
Foundation, which has spent at least $2 million to fulfill Bratton’s requests
to hire old friends as NYPD consultants.

4.A rabbinical court noted that the former chief
financial officer of an Orthodox charity called Aish Hatorah New York owed the
charity $20 million that he had allegedly stolen. Since the
forensic accountant examined only a portion of the charity’s records for the 17
years during which the group’s CFO, a rabbi determined that it was “likely”
that “approximately $20,000,000 was stolen from Aish Hatorah over the years.”
That was the eye-popping ruling of the Rabbinic court. Arguments in civil
court, however, noted that the ruling should be in the neighborhood of $21
million including interest.

6.U.S. Senator Sherrod
Brown introduced an amendment tothe Every Child Achieves
Actcurrently before the House and Senate that would “strengthen
charter school accountability and transparency, prevent fraud, and increase
community involvement.”

7.Transitions: One, possibly two,
controversial leaders are stepping down from their leadership posts: Diana Aviv, who has led Independent Sector for 12
years, will leave the nonprofit-advocacy organization on October 1 to take a
new job as chief executive of Feeding America. Nancy Brinker, the
founder of Susan G. Komen, has resigned from her paid position to assume an
unpaid role as a top volunteer. There have been calls for Brinker to step down
for years, but she stayed in her over $400,000 positions (receiving a 64-percent pay raise) while
donations fell by at least 25% and participation at 3-day events declined 37%.

8.Update: the IRS
Inspector General issued his report, which set forth the following conclusions:
• “No evidence was uncovered that any IRS employees had been directed to
destroy or hide information from Congress, the DOJ or TIGTA.” • “[T]he
investigation did not uncover evidence that the IRS and its employees purposely
erased the tapes in order to conceal responsive e-mails from the Congress, the
DOJ and TIGTA.” (source)

9.The Internal Revenue
Service approved 94,365 applications from organizations seeking 501(c)(3)
status in fiscal year 2014, more than double the number approved in the
previous two years, according to the IRS’s 2014 Data Book. According to the
National Center for Charitable Statistics, there are nearly 2 million nonprofit
organizations registered in the United States

10.According to a Nonprofit Finance Fund survey, 79
percent of nonprofits reported an increase in demand for service offerings
in 2014.

We flagged these few examples of

1.South Arsenal
Neighborhood Development Corp. (CT) $205,000

2.Communication Workers
of American local union No. 7603(ID)
$136,000

3.St. Patrick’s Seminary and
University (CA) $200,000+

4.Medina (NY) Lake
Ontario Youth Athletic League football program $6000

5.21st Century
Cooperative (IO) $1.4 million

6.Ryder Funeral Home (MA) $550,000

7.Tripoli Shrine
Temple/Shriners Hospitals for Children $205,000

8.Palma Ceia United Methodist (FL) $2.1
million

9.New Hampshire Sheep
& Wool Grower’s Association $17,000

10.Fruitlands Museum (MA) $1.3 million

11.Colonial Theatre (NH) $103,000

12.Thompsonville Little League (CT) $8100

13.Silas Bronson Library (CT) $170,000

14.Western International High School (MI)
$10,400

15.Esperanza Detroit (MI) over $100,000

16.Culture and Heritage Foundation (PA) $800,000

17.Nonprofit Nursing Home Group (LA, AK) $200,000

18.Bristol Library Foundation (VA) $21,000

19.Habitat for Humanity of Marion County (CA) $10,000

20.Crisis Ministry of Davidson County (NC) $48,000

21.Charles Pinckney Elementary School (SC) $6000

22.St. Rita's Catholic Church (CA) $425,000

23.Farmington High Cheer Backers (MI) $10,000

24.Bob Woodruff Foundation $100,000

25.Martin De Porres School (NY) $500,00

26.Free Methodist Church (NV) $425,000

27.Framingham (MA) United Soccer League $200,000

28.St. Francis of Assisi School (NH) $150,000+

29.Centra Health Credit Union (VA) $2 million;

30.Chicana Service Action Center (CA) $1.8
million-$8.5 million

31.Veterans:

·Wounded
Marine Careers Foundation (CA) $1.2 million

·Wounded Wheels (VA)
$90,000

Political/public official chicanery(just a few):

1.The former city clerk of Garwin (IA) is facing
charges after being accused of stealing $500,000 from the city.

2.A former audiovisual technician for the
Los Angeles Department of Water and Power pleaded not guilty to charges
of misappropriating more
than $4 million in public funds over an !8 year period.

3.A former Curry County (NM) probation officer has
been arrested for stealing money over a 3-year period.

4.Three New York postal workers have been accused of
playing the Grinch and stealing gifts destined for underprivileged children by
rigging the Operation Santa program where they worked.

5.The former city clerk
of Garwin (CA) is facing charges after being accused of stealing $500,000 from
the city.

6.A
former Calhoun County (CA) Veterans Affairs Director accused of embezzlement
has entered a guilty plea.

7.Update: State Sen. Rick
Brinkley, facing an accusation that he embezzled more than $1 million while
working for the Better Business Bureau in Tulsa, has resigned from his Senate
committee chairmanships.

8.California Congressman Dana Rohrabacher today
accused his former campaign treasurer, Jack Wu, of embezzling more than
$170,000 in campaign funds from the congressman's campaign committee.

9.The former director of finance at Jackson (MI)
Public Schools has been indicted on charges of embezzlement, according to court
records. He was arrested

10.The
Ojai Police Department launched an investigation. Police said that their
investigation revealed $60,000 was embezzled from the Ojai Unified school
district over a period of two years.

11.The former treasurer of
Pennsylvania's financially troubled capital city of Harrisburg pleaded guilty
to embezzling from two non-profit groups. The agencies that were hit were
the Historic Harrisburg Association, where he was executive director for four
years and which did business with the city and Capital Region Stonewall
Democrats, where he was treasurer.

12.A woman was sentenced
to probation and ordered to pay restitution for embezzling up to $130,000 from
Michigan State University. She was a
former employee in MSU's College of Osteopathic Medicine. A second embezzlement
charged was dropped.

Nonprofit
Imperativegathers
its information principally from public documents...some of which are directly
quoted. Virtually all cited are in some phase of criminal proceedings; some
have not been charged, however there is money missing. On rare occasions, there
may be duplicates.

Gary
Snyder is the author of Silence: The Impending Threat to the Charitable
Sector (Xlibris, June, 2011) and Nonprofits: On the Brink
(iUniverse, February, 2006) and articles in numerous publications. The book can
be bought at amazon.com,barnesandnoble.com, Barnes and Noble (store)

About Me

Gary Snyder is the author, most recently, of the groundbreaking expose on the charitable sector, Silence: The Impending Threat to the Charitable Sector as well as the often-cited guide on best practices and key concepts, Nonprofits: On
the Brink.

He is the publisher of a
twice-monthly newsletter, Nonprofit Imperative that gives an update on the current status of the
charitable sector.

Snyder is often quoted and frequent contributor to the blog of the National
Committee for Responsive Philanthropy. Snyder twiceauthored the Governance Chapter of the Michigan
Nonprofit Management Manual (4th and 5th editions).

He is a speaker on ethics,
financial and governance matters of the sector. For almost a decade, Snyder is frequently
consulted by Congress and has been quoted in print, broadcast and online media
outlets.